Opportunity Cost Flashcards
(16 cards)
What do governments need to do
Governments need to make choices between alternative uses of resources
What is economic analysis
Analysing the choices made by consumers firms and governments
What does it mean if ur making an economic choice
It’s creates a sacrifice because alternatives must be given up which means ur losing the benefit the alternative would have provided
What is opportunity cost
Opportunity cost is the benefit lost from the next best alternative
What is PPC and how does it help economist
Production Possibilities Curves help economists to analyse trade offs(opportunity cost) and show the maximum possible combination of goods/services that can be produced using all resources
What do points on the curve represent
Points on the curve represent efficiency
What do points inside the curve show
Inefficiency
What do points beyond the curve show
That they are unobtainable
How can economic growth be shown in ppc
Economic growth can be shown with a shift right on the ppc graph
What is the economic growth
Economic growth is an increase in productive potential of the country .
What causes a shift in ppc right and economic growth
An increase in the quality and quantity of the factors of production
When do ppc shift downwards (left)
When there is an economic decline due to war, natural disasters etc
What is the concept of efficiency
The concept of efficiency is when all factors of production are being used to their maximum and are on the ppc line
When is it inefficient
Any point inside the ppc is inefficient either due to unemployment
